COVID-19 impact on Hertfordshire October 2020
Economic impact
Modest economic growth in August • Monthly Gross Domestic Product (GDP) grew by 2.1% in August 2020 following four successive months of growth: • 2.7% in May • 9.1% in June • 6.4% in July
Modest economic growth in August • The easing of lockdown restrictions, Eat Out to Help Out scheme and ‘stay - cations’ boosted consumer demand. • Accommodation and food services contributed 1.25% to GDP growth. • But the level of output has not fully recovered from the record falls seen across March and April 2020, and is still 9.2% below the levels seen in February 2020.
UK economy grew by 8% over the summer • GDP grew by 8% in the three months to August 2020 as restrictions on movement eased. • Strong bouncebacks over rolling three month period (June to August) in: • Construction – 18.5% • Manufacturing – 11.3% • Services – 7.1% • Fragility of recovery underlined by 45% of businesses reporting in September that Source: Office for National Statistics turnover had decreased below what is ONS Business Impact of Coronavirus (COVID-19) Survey (BICS) normally expected for the month.
Growth slows in October • Business confidence indicators reported a reversal of output in October following the summer’s recovery. • There was an overall increase in business activity in October, but the rate of expansion slowed considerably during the month. • There was a much weaker contribution from the service economy due to hospitality sector restrictions.
Growth slows in October • Service providers reported a decline in new business for the first time since June. • In contrast, there was another solid expansion in new orders for manufacturing companies in October.
Purchasing Managers’ Index (PMI) • The Flash UK K Manufact cturin ing PMI, an • The Flash UK K Servi Services es PMI was at 52.3 in indicator of manufacturing performance, October, down from 56.1 in September dropped from 54.1 in September to 53.3 in and well below August's peak of 58.8 - the October - the slowest improvement in worst performance for the sector since overall business conditions since July. June. • The fall reflects weaker rises in output and • The latest setback for service sector new orders and a faster decline in staffing. output was due to a renewed downturn across the travel, leisure and hospitality • However new export orders increased at industries. the fastest pace since February 2018, with rising demand from clients in China and • Output was impeded by tighter restrictions the US, and a temporary boost from Brexit on trade and the impact of local lockdown stock building among clients in Europe. measures on consumer spending.
Employment confidence levels fall • Deep job cuts signalled in both the manufacturing and service sectors. • Lower staffing numbers attributed to redundancies and the need to reduce operating costs amid shrinking customer demand. • Employment confidence was the lowest since May, mirroring the trend for current business activity. • Worsening outlook was centred on the service sector.
Consumer spending recovers in some areas High frequency spending indicators • Social spending remains suppressed but spending o n ‘staples’ and ‘ delayable ’ goods are now above levels seen towards the beginning of lockdown. • Strong substitution across categories of spending suggests aggregate consumer spending has recovered. • Though consumers have cut back on social spending, they have increased spending in other categories and this has helped to Source: Bank of England and Bank calculations. Notes: Based on the CHAPS payment lessen the economic impact. that a sample of around 90 UK companies receive from their merchant acquirers on a daily basis. These payments reflect the sales that companies make through debit and credit card purchases, which are summed to estimate rolling seven-day revenues. Latest observation: 07 October 2020.
But retail continues to show signs of stress
Investment and employment intentions remain weak Aggregate consumer spending has returned to levels seen at the start of the year (even if some of that strength is temporary). Indicators related to investment and employment have remained quite weak. Source: British Chambers of Commerce. Latest observation: 2020 Q3
Labour market impact
Universal credit • There is a threefold increase in people Claimants as a proportion of residents aged Total claimants 16-64 Geographic area registered for Universal Credit in the county, Jun-20 Jul-20 Aug-20 Sep-20 Jun-20 Jul-20 Aug-20 Sep-20 compared to the same time last year: Watford 3,980 4,120 4,300 6.4 6.6 6.9 4,285 6.9 Broxbourne 3,770 3,925 4,140 6.3 6.5 6.9 4,025 6.7 • 38,775 claimants in September 2020 England 2,200,615 2,241,155 2,314,695 6.3 6.4 6.6 6.6 2,306,555 • 13,035 claimants in September 2019 United Kingdom 2,590,175 2,642,815 2,726,510 6.2 6.3 6.5 6.5 2,709,210 Stevenage 3,290 3,365 3,470 5.9 6.0 6.2 3,450 6.2 • Hertfordshire fares better than the national Hertsmere 3,515 3,585 3,745 3,770 5.6 5.7 5.9 6.0 average in terms of the proportion of Dacorum 4,840 4,990 5,135 5.0 5.2 5.3 5,085 5.3 Hertfordshire 36,350 37,370 39,010 4.9 5.1 5.3 38,775 5.2 working age residents claiming benefit: Three Rivers 2,575 2,675 2,810 4.5 4.7 4.9 2,815 4.9 • 5.2% in Hertfordshire North Hertfordshire 3,590 3,710 3,835 4.4 4.5 4.7 3,825 4.7 Welwyn Hatfield 3,565 3,635 3,785 4.4 4.5 4.7 • 6.5% for the rest of GB 3,810 4.7 East Hertfordshire 3,630 3,690 3,960 3.9 4.0 4.3 3,930 4.2 • Both Watford and Broxbourne have claimant St Albans 3,595 3,675 3,830 4.0 4.1 4.3 3,780 4.2 rates that are worse than the national average
Universal credit • As with the rest of the country, Claimants as a proportion of residents aged Total claimants 16-64 Geographic area Hertfordshire’s claimant count dropped Jun-20 Jul-20 Aug-20 Sep-20 Jun-20 Jul-20 Aug-20 Sep-20 slightly in September, compared to August. Watford 3,980 4,120 4,300 6.4 6.6 6.9 4,285 6.9 Broxbourne 3,770 3,925 4,140 6.3 6.5 6.9 4,025 6.7 England 2,200,615 2,241,155 2,314,695 6.3 6.4 6.6 6.6 2,306,555 • Of Hertfordshire’s 10 districts, only Watford United Kingdom 2,590,175 2,642,815 2,726,510 6.2 6.3 6.5 6.5 2,709,210 and Broxbourne experienced claimant count Stevenage 3,290 3,365 3,470 5.9 6.0 6.2 3,450 6.2 Hertsmere 3,515 3,585 3,745 3,770 5.6 5.7 5.9 6.0 rates above the national average. This Dacorum 4,840 4,990 5,135 5.0 5.2 5.3 5,085 5.3 occurred for four consecutive months, from Hertfordshire 36,350 37,370 39,010 4.9 5.1 5.3 38,775 5.2 Three Rivers 2,575 2,675 2,810 4.5 4.7 4.9 2,815 4.9 June to September 2020. North Hertfordshire 3,590 3,710 3,835 4.4 4.5 4.7 3,825 4.7 Welwyn Hatfield 3,565 3,635 3,785 4.4 4.5 4.7 3,810 4.7 East Hertfordshire 3,630 3,690 3,960 3.9 4.0 4.3 3,930 4.2 St Albans 3,595 3,675 3,830 4.0 4.1 4.3 3,780 4.2
Universal credit Claimants as a proportion of residents aged 16-64 • Claimant count is currently at a 15 year high. Hertfordshire GB • Coronavirus can be said to have had more 7 of an impact on the claimant count than any 6 other event, since 2008/2009. 5 4 % 3 2 1 0 Date
Count of Unique Job Postings by Month - Hertfordshire Job postings 2019 2020 50,000 45,000 40,000 35,000 30,000 • In the first quarter of 2020, job postings 25,000 20,000 were 8% higher in Hertfordshire than in the 15,000 10,000 previous year. This compares to 5% in 5,000 0 England. • Post lockdown (23 March), there were 53,000 fewer job postings from April to Count of Unique Job Postings by Month – England September compared to the corresponding period in 2019. 2019 2020 2,500,000 • This represented a fall of 21% in unique job 2,000,000 postings over the six month period - a rate 1,500,000 broadly similar to England, which saw a total 1,000,000 of 286,669 (20%) fewer postings than 2019. 500,000 0
Universal credit • Hertfordshire ranked 20th out of the 38 LEP HR1 redundancy notifications in Hertfordshire June - Sept 2020 areas in England in terms of redundancy notifications between June and Sept 2020. • 3,861 redundancies were reported in the period. This equates to 0.6% of county’s workforce. • Hardest hit sectors include: • Accommodation and food services • Distributive trades (including retail) • Manufacturing • Professional and scientific services
Business environment
Business stock • The true extent of the pandemic on the % Growth rate in both business stocks and GVA in Hertfordshire business base will not be seen until the next 20.0% release of statistics in September 2021. 15.0% • However, the impact of tiered lockdowns is expected to hit the food, catering, hospitality 10.0% and retail sectors hard and we can expect 5.0% significant reductions in the business stocks of those industries. 0.0% 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 • On 13 March 2020 there were 1,710 fewer -5.0% % Business growth % GVA growth businesses in Hertfordshire than on the same date in 2019.
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